Opening a SIPP is simpler than you might think. It’s a quick and easy process, where after submitting a few details, you can let your new provider take the wheel. With Wealthify, for example, all you need are a couple of documents to hand and a few taps to get set up.
This article is a step-by-step process on how to open a Self-Invested Personal Pension (SIPP). What you’ll need to think about before opening one, and how to transfer into your new SIPP once opened.
Things to consider before opening a SIPP
If you’re already asking how to open a SIPP, then it’s likely you’ve done a fair bit of research and have already decided to make it your new financial product.
Whether you’re self-employed, want to transfer old workplace pensions into a new pot, or fancy another personal pension for additional retirement savings outside of your workplace and State Pension — SIPPs are a good choice for their tax-efficiency and government tax-relief top-up.
- Firstly (and this is a biggie), there’s no guarantee that your investments would perform better in a SIPP than any other pension scheme.
No one can predict the stock market’s highs and lows, and it’s always important to be mindful of the risks of investing.
- The same can be said for combining pension pots — there’s no guarantee this would earn you more money as a combined pot.
Seek independent financial advice to help you decide.
- If you’re transferring existing pensions into a SIPP, there may be exit fees to consider.
Check your current provider’s statement or contact their customer service team to be sure.
- Keep in mind the ongoing charges and fees that may be at play.
Most pension schemes charge an annual management fee for using their service, and there’ll likely be charges involved during the process of buying and selling your various assets.
- Additionally, if you’re transferring into your new SIPP, check you won’t lose any important benefits by leaving your current provider.
At Wealthify, we don’t accept any pension transfers from ‘defined benefit’ schemes (often used with public service employment). Likewise, we can’t accept those with safeguarded benefits such as a guaranteed income, when you can get more than 25% tax-free cash, or a generous loyalty scheme.
- If you’ve already started taking an income from your pension, we won’t be able to accept that one.
It’s known as a crystallised pension from that point on.
- Pension transfers need your assets to be sold off before transferring over.
This means your investments are ‘out of the market’ for a period of time.
How to set up a SIPP
While there are plenty of personal pensions on the market, naturally, we can’t speak for those in great detail. We can however, tell you exactly what to expect from Wealthify's Self-Invested Personal Pension if our product is on your list.
Your attitude towards investing is unique to you — and at Wealthify, we do all we can to cater to your individual preferences.
Step 1: Choose your investment style
Tell us a few details about yourself, including the age you plan to retire and how much money you’d like to
put into your SIPP, whether that’s a lump sum or regular deposits (starting at a £50 minimum contribution).
A benefit of Wealthify’s SIPP is that you can get an instant 25% tax relief top-up on anything contributed up to £60,000 or 100% of your earnings in the current tax year (whichever is lower). This may not be suitable for everyone, but if it applies to you then you have the option to opt in for this tax perk at this stage!
You’ll see a projection of what your new pension pot could build up to, depending on the investment style you’re comfortable going with. You can also choose whether you’d like to focus on ethical investing at this stage, too.
With investing, your capital is at risk, and you could get back less than what you put in.
Step 2: Suitability quiz
Then take our quick quiz to help our Investment Team create an Investment Plan that’s right for you. This step also factors in which investment style you opted for: Cautious, Tentative, Confident, Ambitious, or Adventurous.
Cautious, for example, is all about minimising losses and making small movements with the aim of beating inflation. Adventurous is at the other end of the scale, where maximising profits is the priority, along with a higher level of risk. You can play with our settings here to see how they affect projections.
Traditionally, pension schemes are designed to be more daring in nature during the person’s younger years, before becoming more conservative as they (and their fund) mature. With a SIPP, you’re free to take a pathway that suits you and your goals.
Step 3: Building your customised SIPP account
Next, our expert Investment Team will take the information you’ve provided to build an Investment Plan that reflects your pension goals. They’ll also manage your investments on your behalf.
Opening a new SIPP only takes a few minutes, but if you’re initiating a transfer from another provider at this time, it could take a few weeks to move over to the account. This is due to your existing pension needing its assets to be sold and transferred over as cash.
Step 4: We optimise your performance
Leave the heavy lifting to us. Once your SIPP is set up and funded, we’ll take it from there — our team will actively adjust your investments to keep in line with your investment style.
Monitor your money’s progress any time; just use our handy app or log in to your online dashboard using a web browser.
How to transfer a pension to a SIPP
If you have an existing workplace pension from a past employer, or simply another personal pension pot that you’d like to move into your new SIPP, it’s a straightforward ‘pension transfer’ process.
After you’ve set your new SIPP up, the provider would typically offer you a simple way to start a transfer. With Wealthify, for example, you can easily start the whole process of opening a SIPP and transferring at the same time.
If you’ve already set yourself up, you can log in to your online Dashboard and use the ‘Transfer in’ button on your home screen.
All you’ll need is:
- Your existing provider(s) name;
- The reference number for the pension pot(s);
- An estimated value;
- And lastly, your permission to proceed.
You can usually find this information on your latest pension statement. We’ll do the rest and combine them into your Wealthify Personal Pension.
Our award-winning Customer Care Team are on hand if you need any further answers to your “how do I set up a SIPP” questions. Get in touch with them at our Help Centre and they’ll be more than happy to guide you through the process.
Please remember the value of your investments can go down as well as up, and you could get back less than invested.
Wealthify does not provide financial advice.
Please seek financial advice if you are unsure about investing. Your tax treatment will depend on your individual circumstances, and it may be subject to change in the future.
